Bruce Iglauer started Alligator Records in Chicago in 1971 with a $2,500 inheritance from his grandfather, and the loan of a down payment on a Chevy Vega from his mother Harriett so he could service retailers with an album by Hound Dog Taylor & The HouseRockers in a time-honored fashion: out of his trunk.

For only $900, Iglauer produced the recording and subsequently pressed 1,000 copies — giving birth to Alligator Records.

This was more than a decade before there was either a Chicago Blues Festival — which Iglauer helped start in 1984 — or a dedicated blues GRAMMY category, which debuted in the form of Best Traditional Blues Recording in 1982.

Fast-forward to 2011, Alligator is now run by 16 employees out of a three-story building on Chicago's North Side and is in the midst of celebrating its 40th anniversary.

In February, the label released a double-disc retrospective, Alligator Records 40th Anniversary Collection, featuring artists from Charlie Musselwhite and Albert Collins to Mavis Staples and Johnny Winter, among others.

On June 12 the label was feted at the 2011 installment of the Chicago Blues Festival in Grant Park. A stable of Alligator artists led by Lonnie Brooks paid tribute to the label's key role in nurturing blues locally and nationwide. Alligator will also be saluted in October at Poland's Rawa Blues Festival with performances by artists Marcia Ball, Lil' Ed And The Blues Imperials, Corey Harris, and C.J. Chenier, all of whom have recorded for the label.

"We're smaller than we were, but we manage to somehow run a profitable company almost every year," says Iglauer. "Our definition of profitable may not be the same as Sony's but we have realistic expectations and operate on realistic budgets, therefore we manage to turn a profit."

What started as a modest operation out of a one-room apartment has grown to a label with a catalog of more than 280 albums, more than 120 of which have been produced or co-produced by Iglauer. One important milestone took place when earned its first GRAMMY in 1983 for Clifton Chenier's I'm Here. The company's most recent GRAMMY came in 2009 for Best Zydeco Or Cajun Music Album for Buckwheat Zydeco's Lay Your Burden Down.

"My company is built on small triumphs, rather than giant steps or landmark events," says Iglauer.

Today, the label remains committed to discovering new talent, and keeping blues and roots music on the radar.

"I want to work with artists with the idea that the record they're making right now for Alligator is going to be the best record of their careers," says Iglauer. "It's going to be the record they want their grandchildren and great-grandchildren to listen to and say, 'That was grandpa.'"

There were two major inspirations for Alligator. One was Bob Koester, founder of Chicago's jazz/blues label Delmark Records.

"Bob was my guide into the world of blues," notes Iglauer. "He revealed an entire parallel universe to me that I never knew existed."

The other was Chris Strachwitz, the founder and president of Arhoolie Records, an El Cerrito, Calif.-based label offering everything from blues, Cajun and zydeco to jazz, Mexican and American Roots music.

"Chris is a smart enough businessman to make his label survive for 50 years, which is sure saying something," says Iglauer, who notes his first blues album purchase was Mississippi Fred McDowell's Mississippi Delta Blues, Vol. 2 on Arhoolie.

In 2010 Arhoolie celebrated its 50th anniversary and the label has extended the celebration into 2011, releasing Hear Me Howling!: Blues, Ballads & Beyond in January. The four-CD boxed set consists of a historical collection of music Strachwitz recorded in the '60s from artists such as Big Mama Thornton, Lightnin' Hopkins, Country Joe And The Fish, Debbie Green, and the Hackberry Ramblers, among others.

The label also celebrated by hosting three days of events and concerts in Berkeley, Calif., in February, featuring such artists as Ry Cooder, Taj Mahal, Michael Doucet And The Beausoleil, and Toni Brown, among others. The proceedings doubled as a benefit for the Arhoolie Foundation, which was founded by Strachwitz in 1995 to "document, preserve, present, and disseminate authentic traditional and regional vernacular music." The foundation was designated as a recipient of the GRAMMY Foundation Grant Program in 2010.

The German-born Strachwitz fell in love with the American blues, country and jazz he heard on Armed Forces Radio Network just after World War II. His family emigrated to Reno, Nev., where he heard a wealth of music from roots artists on border radio stations.

"I was captured by the rhythm primarily," explains Strachwitz. "They all had their totally individualistic style."

Strachwitz began amassing recordings and, while still in his teens, started a mail-order business to service European collectors. The service enabled him to buy more records and eventually start field recording.

Arhoolie's first release in 1960 was Mance Lipscomb's Texas Sharecropper And Songster, which Strachwitz recorded the previous year during a trip across the South with British blues scholar Paul Oliver. Strachwitz and his wife Alice stuffed the albums into the jackets themselves until they had 250 copies ready for sale.

The basis of the label's catalog became Strachwitz's numerous field recordings of blues, gospel and zydeco musicians mainly from Texas, Louisiana and Mississippi, including artists such as Chenier, Hopkins, McDowell, and Bukka White.

"I became a pretty good detective," says Strachwitz, who explains that his techniques for finding musicians ranged from consulting old phone books to striking up conversations with men shooting craps on the sidewalk.

The financial foundation of the label, with 10 employees, has become Tradition Music Co., its publishing unit. Country Joe McDonald's "I-Feel-Like-I'm-Fixin'-To-Die Rag" provided the down payment on the building that houses Arhoolie and the Down Home Music Store, the label's specialty retail unit. Other important titles in the Tradition catalog include K.C. Douglas' "Mercury Blues," which has been covered by Steve Miller and Alan Jackson, and McDowell's songs "You Gotta Move" and "Kokomo Blues," which have been covered by the Rolling Stones and Bonnie Raitt, respectively.

And what happened to the thousands of recordings Strachwitz collected?

They are the primary asset of the Arhoolie Foundation. The foundation's current chief project is the cataloging and digitalization of the Chris Strachwitz Frontera Collection, Strachwitz's cache of approximately 17,000 Mexican-American and Mexican vernacular recordings, with the ultimate goal of making them available for listening through the UCLA library system.

As Arhoolie and Alligator are poised to forge ahead amid an evolving music industry landscape, what keeps them motivated and committed to their labels?

"It's because I can bring to the public music I truly love — music that moves me, music that fulfills deep emotional needs and music that is also often very fun to listen to," explains Iglauer.

Strachwitz says simply, "I love it."

(Dave Helland became interested in roots music through his acquaintance with Harry Oster at the University of Iowa.)

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